Profits edge upwards at Kerry Group despite challenges

KERRY GROUP is performing well in 2009, despite the challenging conditions, particularly the “phenomenal headwinds” in currency exchanges, and there is quiet confidence for the rest of the year, its chief executive Stan McCarthy said yesterday.

In an interim statement released to co-inside with Mr McCarthy’s second annual general meeting at the helm, the food and ingredients group said that despite slightly weaker volumes trading profit margin had increased 40 basis points over the same period of 2008.

Kerry said it is confident of delivering earnings growth in 2009 of 160-165 cent per share as guided at the start of the year.

A sharp change in consumer habits meant people were more value conscious in 2008; there was a switch to quick-service restaurants, and raw material volatility also significantly affected the food and beverage industry, Mr McCarthy said at the annual general meeting (agm) which was held in the Brandon Hotel, and was attended by 100 mostly local shareholders.

Volatility in the dollar at the beginning of the year and the decline in value of sterling in the fourth quarter was particularly challenging for the group, whose food business is concentrated in the UK and Ireland.

However the group’s strategy of promoting and acquiring brands was proving successful, Mr McCarthy said.

“Increased promotional activity is being used to support brands and counteract the downturn. We are convinced more than ever the brand strategy is the right one,” Mr McCarthy said, referring to brands like Denny, Low-Low and Cheestrings.

The group was working very closely with the supermarkets “to get our brand to the consumer”, he added.

In the ingredients sector which dominates the business of Kerry Group - accounting for 66 per cent of the group business in 2008 - management were “very excited about the growth in Asia -Pacific” where revenues were up 19.3 per cent.

They could not expect double-digit growth every year but there was still plenty of opportunity for the group in that region and they had invested in Indonesia for the first time in 2008, Mr McCarthy said.

Economic conditions were “more violent and volatile” on this side of the world than in Asia, Mr McCarthy said.

The chief executive also said Breeo Foods was a very good acquisition for Kerry group and while paying out a deposit of €20 million had been a bit worrisome at times management was convinced it was the right move.

The appeal to the Supreme Court by the Competition Authority had not put a stay on integration and acquisition was moving forward.

Mr McCarthy also told the meeting the group’s balance sheet put it in “a very comfortable” position.